Suppose Chile and Côted'Ivoire have the same fraction of researchers and the same knowledge efficiency parameter, but Chile's population is larger. Chile has a higher per capita output growth rate.

Question

Quizplus · Accepted Answer

Since both countries have the same fraction of researchers and knowledge efficiency parameter, their technological progress is the same. However, Chile's larger population means that it has a larger pool of human capital and a larger market. This contributes to higher productivity, and therefore, a higher per capita output growth rate.

Suppose Chile and Côted'Ivoire Have the Same Fraction of Researchers